Wang Sheng from Innoangel: Stand on the trend to start your business
A group of investors play rock and they even find some managers… The band is called Lao Bangcai – a slang in Beijing – which means old folk. The leading guitarist of the band, Wang Sheng, told CMBN that the final name was still undecided.…

The band is called Lao Bangcai – a slang in Beijing – which means old folk. The leading guitarist of the band, Wang Sheng, told CMBN that the final name was still undecided. Because there are young people joining in, it’s not suitable to call it Lao Bangcai anymore. They may change the band’s name to Rookie or Cai.

Lao Bangcai is a powerful representative of cross-boundary mixed group: Wang Sheng, the leading guitarist, is the partner of Innovation Angel Funds; Liu Changge, the accompaniment guitarist, is LP of Beiruan Fund; Wang Tong, the bassist as well as brother of Wang Sheng, is the co-founder of Beiruan Angel Fund; Xu Zheg, the leading singer, is the founder of “Outdoor planet” Project under Innoangel; Yao Lan, the beauty keyboard, is an auditor; and Du Peng, the drummer, is a manager of Metro.

The members were a group of early rockers in Beijing. They founded their own band in 1993 while studying in the university. They even performed in bars and clubs. At that time, a good performance could earn 1,000 yuan, and each member could be paid 100-200 yuan, which was quite well-paid. Later, Wang left the band after graduation. With time going by, it has been nearly 20 years since Wang Sheng’s last time to play guitar.

Wang Sheng recalled, “In 1993, the rock atmosphere was strong in campus. We performed twice in Tsinghua. Both performances were very popular. However, the situation turned downwards in 1995. Students didn’t like bands. Disco started to be prevalent.”

By the end of 2015, Liu Xiaoying, the founder of Eagles Fund, established Eagles Band. They needed a guitarist and invited Wang Sheng. Wang only rehearsed twice and performed once. Though he felt it was not so good, he was incited to play music again. However, Wang has different taste from Eagles Band. He then invited several friends and relatives to form a new band – Lao Bangcai. They even made some derivative products ritually, such as T-shirt.

“Are you prepared for the debut?” CMBN asked.

Wang Sheng, “Ha, the debut is not important. It will be enough as long as we love music and play together. First, I rehearse some songs, and then invite friends to write some original music to play in the future.”

During the break of rehearsal, Wang praised their T-shirt and sit with us to talk about domestic music projects and music investment market.

CMBN: There were not many music projects acquiring investments. What do you think the reason is?

Wang Sheng: Actually, I especially love music. I’m prone to invest when I see music programs. But you should not put your personal emotion in investments. Objectively, many music projects are not suitable for investments.

At present, music projects still needs improving in the area of investment. Of course, the incomplete copyrights in China is an important reason. But after strengthening copyrights, there also emerges a problem – who has more money, who has more music. And users also follow them, for users are always faithful to music rather than to any music platform. QQ Music bought lots of songs, and it attracts fans. Ali also bought many, and some part of users choose Ali. It makes start-ups very hard.

We thought radio market might be better, such as Lizhi and Himalaya who produce contents themselves. They have many radio channels and also play music, but people are more likely to listen to anchors. However, major radios have taken up nearly the whole market now.

So does music festivals. The policy is tight now. Last year, the number of festivals dropped. All in all, it’s hard to invest on music.

CMBN: Since music investment has been very hard, why did you invest on 13-Month’s Angel round at that time?

Wang Sheng: Lu Zhongqiang and I are good friends. Sure, we also discover the value of 13-Month. It has become a famous folk music show brand in China. Old Lu has strong commercialization ability in music industry. We also find several possible exits in music business, including show, as well as some new music forms that gratify the demands for cultural promotion.

Also, we are willing to have a try in this industry. This is investment. If you don’t invest, you won’t understand it. Only if you paid will you start to know it.

In fact, we invest a lot on cultural events, including game, anime, film & TV’s IP platform, and so on. However, compared to other industries, music business is small. It lacks power. If platform investment means a battle for capital, and as there’s no core competiveness in other areas, derived IP value is still not enough. Therefore, we still look for investment logic in music business.

CMBN: How do you think of the future of music projects?

Wang Sheng: Actually, there are opportunities for music projects. We closely concerned about IP and original works. We invested several good projects before, such as Shanghai Youzu and Candy Mengmeng. Though the investment environment of music project is not as good as that of game, anime, internet film, there are several big advantages in the whole original field. It might drive music projects forward. Stand on the tide to start a business. You will be pushed forward in this trend. Lei Jun said, “Even a pig can fly at the draught.”

One good fact is that culture has renewed largely in order to satisfy the need of the new generation. Sub-cultures in the past changed to the mainstream cultures. After the living standard has been improved, people start to pursue enjoyments on culture and entertainment. The upwards trend of Chinese box office is the best proof, and film is only part of entertainment. That is to say, culture has structural upgrades with young people.

Another fact is the Internet. There is not much profits of culture on the Internet, such as online video platform is relatively weak compared to traditional video platform, and the revenue scale is small. However, in the long run, online platforms will beat traditional counterparts, for the old ones represent the senior and middle age, while Internet is the level-up of cultural products for the young. Therefore, the bonus will continue and enter to an outbreak period. Music is capable on internet platforms.

CMBN: What do you think is the most important for the development of music projects in the future?

Wang Sheng: We don’t pay much attention on music projects because we emphasize on core IP. Though even a song can be called IP, it has low derived value. However, a good literary work can give birth to movie, TV, game and even sell plenty of derivative products. When it comes to music, it’s difficult.

Of course, domestic music structure is changing, such as new music group, like AKB48, is very popular in China. But it’s hard to reach to their level in China.

Because AKB48，was born in a period when Japanese pop music structure was completely developed. Though domestic girl group like SNH48 copies AKB48, and even has its own theatre or has close relationship with fans compared to stars before, they failed to compete with AKB48. The root cause is the content.

After the debut, AKB48 has a lot of songs in TOP10 Japan chart every year. They even have more than half of the songs on the chart, which means a strong business chain and maturity behind them. It’s not easy for Chinese online stars because of the immaturity and developing commercialization of Chinese music. We are not at that period.

CMBN: What do you think of online celebrities? What’s the difference between them and Sister Lotus 10 years ago?

Wang Sheng: I think the reason for the birth of those online celebrities is the effect of the changing young groups. Online celebrities now are more like webmasters 10 years ago instead of Sister Lotus. They use the benefits of social networking, new media and new generation of audiences.

As far as I know, there were around 40 online celebrities last year, and each of them made more than 100 million yuan on e-commerce. Now, young people have different consumption ideas from the past. They are impulsive at consumption. As long as they are your fans, price and comment are no longer important. Therefore, online celebrities have strong power in guiding fans. They not only have intensive influence on ads, e-commerce, but also on tourism and other aspects in life.

Investors are also trying to understand online celebrities now. Though we are not sure how large it will be, we agree that good online celebrities are able to reach a common value. We will soon invest on a visual online celebrity.

CMBN: Are there many music projects for investments?

Wang Sheng: Not many. In fact, many musicians are quite traditional. People who have cross-boundary intentions and internet ideas are even fewer. Being artists, traditional musicians have fixed thinking modes. However, the essence of an investor is business man. They have different languages, thus it’s hard for them to talk with each other.

But new generation of investors might communicate well with young musicians. However, capitals are usually controlled by experienced old investors. Therefore, many companies are looking for after-90s as investment managers. They want to discover good projects and report to co-founders. But old investors do not understand the value of projects in young people’s eyes. They fail to feel it. Even though they invest on it, it’s out of emotion. The cultural gap can’t be wiped away.

Sure, there are some good projects and earn money. However, generally, there are not too many excellent projects in music industry. Musicians have difficulties and few start their business.

Piracy music platforms that have been invested are acquired by larger platforms with just one or two hundred million. While projects of similar scale in other industry could be sold for several hundred million easily. Therefore, the investment market in music business is not mature.

CMBN: Do you have any advice for music entrepreneurs?

Wang Sheng: Entrepreneurs should not be eager for quick success and instant benefits. It’s difficult to success in this way. It’s better for them to do their business from the bottom of the heart. You should be willing to invest and devote to your project, and create values during the process. This is the optimum.

Do not start a business merely for the business. Do something you like and do not stick to the fixed rules. Because things are analogies, try to understand other industries. For example, if you do music project, you can try to know something about game industry. It might bring you new ideas, or help you solve pain points in your business.